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TMI Blog2009 (4) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... , is reduced by "expenses/deductions" as per the provisions of section 29 read with sections 30 to 43D in order to arrive at the "income" referred to in section 28 of the Act. Therefore, when the Assessing Officer invokes section 40(3) read with section 29, what he consequently computes is the "income" referred to in section 28. Orders of the Assessing Officer and the Commissioner of Income-tax (Appeals) are misconceived and cannot be sustained – Appeal allowed X X X X Extracts X X X X X X X X Extracts X X X X ..... that the disallowance made in the computation of income from business should also form part of the computation of eligible deduction under section 80HHC. The learned Commissioner of Income-tax (Appeals) should have applied the same analogy to section 80-IA also. We have considered the rival submissions in the light of material on record. In the assessment order dated March 31, 2006, the Assessing Officer made a disallowance of Rs. 4,54,049 under section 40A(3). It appears from the grounds raised by the assessee before the Commissioner of Income-tax (Appeals) that Rs. 4,54,049 forming part of the income, after the above disallowance, was not considered by the Assessing Officer for computing the deduction under section 80-IA/IB. In the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. In our opinion the orders of the Assessing Officer and the Commissioner of Income-tax (Appeals) are erroneous and are unsustainable. Section 80-IA is part of Chapter VI-A of the Act and the deduction under this section is available from the "profits and gains of business" derived by an undertaking specified therein. Sub-section (1) of section 80-IA reads as under: "80-IA(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the trading and profit and loss account, is reduced by "expenses/deductions" as per the provisions of section 29 read with sections 30 to 43D in order to arrive at the "income" referred to in section 28 of the Act. Therefore, when the Assessing Officer invokes section 40(3) read with section 29, what he consequently computes is the "income" referred to in section 28. The Commissioner of Income-tax (Appeals) says that a disallowance under section 40A(3) will create a "deemed income". This view is totally erroneous. The disallowances made by the Assessing Officer under different sections from 30 to 43D of the Act do not change the nature of the "income" that is arrived at. We see no ambiguity in this regard. Therefore, we are of the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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